Released on: June 13, 2008, 2:50 am

Press Release Author: Hakan Ekstrom

Industry: Management

Press Release Summary: The Finnish forest industry has had a tough year. The wood
supply has been tight and the country is having some of the highest sawlog and
pulpwood costs in the world, according to the market report, the Wood Resource
Quarterly (WRQ).

Press Release Body: USA, June 13, 2008 -- In the 1Q 2008, softwood and hardwood
pulpwood prices in Finland reached an 18-year high (in US dollars) after having
increased for 10 consecutive quarters. Softwood pulpwood prices were 57% higher in
2008 than in 2006, while hardwood prices increased over 67% during the past two
years.

The surge in wood costs cannot only be explained by the weakening US dollar; higher
costs in the local Euro are also contributing to the price increases. The Finnish
pulp industry now has the highest softwood pulplog costs of all the 16 regions
tracked by the WRQ, averaging over twice the wood costs for pulpmills in the US,
Latin America and Oceania. Hardwood pulplog costs are the second highest in the
world after Germany.

The high wood costs in Finland are the result of increased competition for logs in
the domestic market because the availability of Russian logs is dwindling. The
Finnish industry has long relied on relatively inexpensive logs imported from its
neighbor in the east, but this situation changed in 2006 when domestic prices in
Russia started to go up and log export taxes were implemented.

The Russian government has assisted its forest industry by shutting of foreign
competition for logs. As of April 1 this year, Russian log export taxes for conifer
species and large birch logs (mainly for plywood production) increased from 20%
(minimum €10/m3) to 25% (minimum €15/m3) of the log value. Smaller birch logs (<15
cm), which are very important to the Finnish pulp industry, are still not taxed.
Although the tax increase of five dollar per m3 is a small share of the total log
cost for Finnish sawmills, it has still had an impact on the sourcing strategies for
many companies in the country. The higher costs for Russian logs has resulted in
increased imports of softwood logs from non-Russian countries from 1.8 million m3 in
2006 to over 2.8 million m3 in 2007. This trend away from Russia to Sweden and the
Baltic States is likely to continue in the coming years.

Private forest owners’ timber sales in Finland in the 1Q were only half of the
timber volume compared to a year ago, a clear sign that there will continue to be
tight supply of logs in Finland and that both pulpmills and sawmills may be forced
to reduce production in the coming months.

Global pulpwood and sawlog market updates are included in the 50-page publication
Wood Resource Quarterly. The report, established in 1988 and with readers in over 20
countries, tracks wood prices in most regions around the world and also includes
regular updates of international pulp, lumber and biomass markets.
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Contact Information

Hakan Ekstrom
Wood Resources International
Seattle, USA
44 222 656
info@wri-ltd.com
http://www.woodprices.com



Web Site: http://www.woodprices.com

Contact Details: Seattle, USA